The debt counselling industry continues to see a growth in applications, and the current economic situation is a huge factor contributing to the financial distress consumers find themselves in.
This is according to Debt Rescue CEO Neil Roets, who said that one of the biggest factors this year so far has been the impact of the fuel price on the consumer budget.
He added that the direct impact on personal transport, as well as the indirect impact on the cost of goods, has made a significant contribution to the increase in living expenses.
“Many consumers have already cut their budgets down significantly, but they still struggle to keep their heads above water,” he said.
“Every income group is being affected by the impact of the slow-growing economy, however the lower- and middle-income group the most.
“Consumers have very little space for adjustments in their budgets, as they are having to already count every rand they spend, and the negative impact on living expenses leaves them with very few options of making it from one paycheque to the next.”
Debt Rescue’s data shows that 94% of consumers have personals loans, 81% have credit cards, 69% have store cards and 45% have overdrafts.
Generally, South Africans will look towards expenses that are easy to cut out of their lifestyle and considered luxuries, such as take-outs, movies etc, Roets said.
“Thereafter they tend to evaluate items that run as debit orders that they are able to reduce, which includes cellphone and gym contracts and clubs they belong to.
“From there they would most likely look at revising various insurances to make their cover more affordable.”
He added that most difficult situations are when they have to make decisions over which debt repayments get priority, when they might be skipping one to pay another, in the hope of catching up on these missed payments somewhere in the future.
“Once it reaches the point of having made all the reasonable changes to living expenses but still not being able to meet minimum debt repayment requirements, consumers need to seek legal help urgently from a debt counsellor to assist them in rearranging their debt in a more affordable manner, to ensure they can still afford their necessary living expenses and meet their debt obligations sustainably,” he said.